Mortgage Demand Slips Despite Another Drop In Interest Rates

• Mortgage demand decreased in the past week despite a drop in average contract interest rates for 30-year fixed-rate mortgages. The rates reached their lowest level since June 2023, but the borrower response was tepid.
• Refinance applications fell by 2.0% after a 19.0% increase the previous week, yet remained 18.0% higher compared to the same period last year. Applications for purchasing a home also declined by 1.0% for the week and were 18.0% lower than the previous year.
• The Mortgage Bankers Association anticipates positive developments in the housing market despite a predicted "mild recession" in the first half of the next year.
• The expectation is based on the Federal Reserve's indication of multiple rate cuts, with the association forecasting a 22.0% increase in mortgage origination volume in 2024 to $2 trillion, driven by a 14.0% rise in purchase volume and a 56.0% surge in refinance demand.

(Source: Reuters)